United Drug profits up 12% to Eur30m

United Drug yesterday reported a 12 per cent increase in pre-tax profits to €30 million for the 12 months to September 30th, prompting brokers to increase their earnings forecasts for the current year.

The Dublin- and London-listed wholesaler of drugs and surgical equipment posted sales of €1.13 billion for the year, a 16 per cent increase on the 2002 figure of €974 million.

Pre-tax profits were €30.2 million this year, up from €26.7 million in 2002. Stripping out an exceptional item and goodwill write-off, which amounted to €4.8 million between them, the company had earnings of €35 million, a 24 per cent increase on last year's profit before tax and goodwill of €28.3 million. There were no exceptional items in 2002.

Basic earnings per share (eps) after the write-off and exceptional item came to 11.32 cent, a 5 per cent increase on last year's figure of 10.78 cent. After the exceptional item, and before providing for goodwill amortisation, eps were 13.09 cent, 14 per cent up on last year's equivalent earnings of 11.58 cent.

The board has proposed a final dividend of 2.97 cents a share, bringing the total dividend for the year to 4.11 cents per share, a 15 per cent increase on last year. Chief executive, Mr Liam Fitzgerald, said this was in keeping with company policy.

The company intends giving shareholders the option of taking all or part of their dividend in new ordinary shares in the company in January.

The balance sheet shows that net assets stood at €162.65 million at the end of September, compared with €147.24 million in 2002. According to the cash-flow statement, net debt stood at €56.9 million at the end of the year, more than €24 million up on the 2002 figure of €32.2 million.

The company spent €24 million on acquisitions in Britain during the year. This led to it incurring an exceptional charge of €1.15 million to cover the cost of redundancies in the British subsidiary of US medical supplies specialist, Ventiv, which it bought in October 2002.

Analysts last night said the results were slightly ahead of expectations. Goodbody Stockbrokers pointed out that the group had increased margins by 0.2 of a percentage point to 3.2 per cent, which allowed earnings growth to outpace the increase in sales.

United Drug's own broker, Davy, described the results as strong and said it would revise its 2004 eps figure up from 14.8 cents to just over 15 cents. Both firms rated the stock a "buy".

The group's shares closed at €2.35 in Dublin last night, down three cents or 1.26 per cent on Monday's close of €2.38.